Management Support
Working Together:
Glossary of Key Legal Terms
Amalgamation – In relation to corporations, a process where one company takes over or merges with one
or more other companies. In relation to charities, the combination of two or more charities to form one
charity.
Auspice – An auspice agreement is an agreement between two (or more) parties for the purpose of
obtaining funding where it would not otherwise be available. This type of arrangement will often be used
where funding is only available to an unincorporated (non-legal) entity or to private individuals (and in
some circumstances to incorporated organisations) if they apply for funding through the auspices (or
administration) of another, usually incorporated, legal entity. Under an auspicing arrangement the Auspice
Organisation will formally apply for the funding on behalf of another and become responsible for the
funding provided and will keep records in relation to the spending of any funded money.
Collaboration – In relation to copyright and authorship, collaboration is where two or more authors
contribute to a work and the contribution of each author is not separate from the contribution of each
other author. Collaborators are treated as joint authors and joint owners of the copyright in the resulting
work. Importantly a person must have permission from all joint owners to reproduce the work. A common
example of collaboration is where a band collectively writes a song. However it is not a collaboration
where one person provides the lyrics for a song and another person provides the music, in this example for
the purposes of copyright the lyrics and music are each separate works in which a separate copyright exists.
Consideration – In relation to a contract, consideration is one of the elements required for a contract to
be enforceable. Broadly consideration is the promise, price, detriment, or forbearance given as value for a
promise. A contract is generally only binding if the promise is supported by consideration. In the example
of a contract for sale where cash is paid in exchange for property, both the cash and property are
consideration. Technical requirements apply regarding the sufficiency of consideration.
Consortium – A combination of the power (usually financial) of more than one person to achieve an
undertaking.
Contract – A legally binding promise or agreement. A promise or agreement is not legally binding and
enforceable as a contract unless the requirements for contract formation are satisfied, including
consideration and certainty of agreement. A contract does not always need to be in writing to be
enforceable, although (for example) contracts for sale of land must be in writing.
Corporation – A legal entity created by charter, prescription, or legislation. In Australia Corporations are
most commonly registered under the Corporations Act 2001 (Cth). The fundamental difference between
corporations and other business entities is that legally a corporation as a separate legal person from its
shareholders and directors. A corporation can therefore own property and be a party to legal action (ie sue
or be sued) in its own right. A corporation limited by shares or guarantee has limited liability.
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Deed – A written document that passes an interest, right or property or creates an obligation binding on a
person. Certain formal requirements must be satisfied (that it be signed sealed and delivered) for a deed to
be valid and enforceable. Unlike a contract a deed does not rely on the agreement of the parties or require
consideration.
Fiduciary – A person who is under an obligation to act in another’s interest to the exclusion of the
fiduciary’s own interest. Examples of fiduciaries include company directors, trustees and partners.
Joint and several liability – When used in connection with the liability of two or more persons, it means
that each person is liable together with the others and individually. The liability may be enforced against all
of the persons bound, or against just one them (meaning this person has to pay the entire amount), leaving
that person to seek contribution from the co-obligees.
Joint venture – An association of two or more persons for particular commercial endeavours with a view
to mutual profit. The precise nature of the relationship may vary and can be based on contractual
obligations only, by establishing a corporation or amount to a partnership. In relation to the Competition
And Consumer Act 2010 (Cth) 'Joint Venture' is defined to mean an activity in trade or commerce:
(i) carried on jointly by two or more persons, whether or not in partnership; or
(ii) carried on by a body corporate formed by two or more persons for the purpose of enabling
those persons to carry on that activity jointly by means of their joint control, or by means of their
ownership of shares in the capital, of that body corporate.
Limited Liability – In relation to corporations limited by shares or guarantee, the principle of having the
liability of members limited to the amount (if any) unpaid on the shares respectively held by them or to the
amount of guarantee given by them. Effectively this means that a shareholder with fully paid up shares
cannot be liable for more than the amount they have invested.
Memorandum of understanding (MOU) – Often used in the context joint ventures and amalgamations,
an MOU is formal, mutually agreed upon document between parties. An MOU generally sets out principles,
strategies, and mechanisms for dealing with common issues at hand and anticipated future actions.
However because it lacks the necessary element of an intention to be bound it is not a legally binding
agreement/contract. Common practice is to state in an MOU that it is not binding on the parties. An MOU
will often precede a formal legal contract.
Merger – In relation to corporations and businesses, a combination of two or more firms or corporations,
usually such that one is absorbed into the structure of the other or others and loses its separate identity. It
generally involves one company acquiring shares or assets in another.
Partnership – The relationship that exists between two or more persons who carry on a business in
common with a view to profit. A partnership is not a separate legal entity from the partners and does not
have limited liability. A range of legal rights and obligations attach to partners including joint and several
liability and fiduciary duties.
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Takeover – The acquisition of sufficient shares in a company by a natural person or a corporation to entitle
the acquirer to exercise control, or influence the voting power attached to those shares and so control the
company.
Tender – An offer which is capable of acceptance. A calling for others to make an offer, usually for the
supply or purchase of goods or services. The seeking of tenders is an invitation to treat, rather than an
offer capable of acceptance.
Transfer of Assets – A conveyance (generally by way of sale) of property from one party to another.
Resources
NCOSS Sector Support
• Templates and Resources
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Formal Collaboration and Governance
Working Together: Resources
NB: The above websites were accessible on 15 December 2015. If the links do not work search on the title of the
document or go directly to the organisation’s website.
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